Q4 2020 Hackett Group Inc Earnings Call
Thank you for standing by today's call will begin momentarily again, thank you for standing by today's call will begin momentarily.
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Yeah.
Yes.
Yes.
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Welcome to the Hackett Group fourth quarter earnings Conference call. Your lines have been placed on a listen only mode and so the question answer session. Please be advised the conference is being recorded hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO and Mr. Rob Ramirez, Chief Financial Officer, Mr. Ramirez, you may begin.
Good afternoon, everyone and thank you for joining us to discuss the Hackett group's fourth quarter results.
Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett group and myself, Rob Ramirez Chief Financial Officer.
A press announcement was released over the wires and four or five P. M. Eastern time for a copy of the release. Please visit our website at Www Dot the Hackett group Dot Com. We will also place any additional financial or statistical data discussed on this call and its not contained and the release on the Investor Relations page of our website.
Before we begin I would like to remind you that and the following comments and and the question and answer session.
And we'll be making statements about expected future results, which may be forward looking statements for the purposes of the federal Securities law.
These statements relate to our current expectations estimates and projections and are not a guarantee of future performance and involve risks uncertainties and assumptions that are difficult to predict and which may not be accurate, especially in light of COVID-19.
Actual results may vary.
These forward looking statements for should be considered only in conjunction with the detailed information, particularly the risk factors.
Change in our other SEC filings at this point I would like to turn it back over share. Thank.
Thank you Rob.
And welcome everyone to our fourth quarter earnings call as we normally do I'll open the call with some overview comments on the quarter I will then turn it back over to Rob to comment on detailed operating results cash flow as well as comments on outlook. We will then review our market strategy related comments after such we will open it up to Q&A.
I would like to start by continuing to acknowledge those dedicated individuals who continue to work non stop and under a very dangerous circumstances to support all of us during this pandemic.
Also want to acknowledge our associates and clients quickly and successfully adapted to the remote delivery requirements around the globe.
This quarter as Rob it's about progress momentum and how eagerly we look we're looking forward for 2021.
Let me first start with our quarterly results.
Since the end of Q2, we have experienced increased activity through the end of the year and we experience. It through the end of the year I am pleased to announce today that our quarterly results exceeded our expectations. This afternoon, we reported net revenues of $59 2 million and pro forma earnings per share of 23.
Which was up 35% sequentially and Brett.
Nobody was revenue net revenues were up two 5% sequentially on lower available days, but as I said pro forma EPS was up strongly from our Covid disrupted Q3 results.
The prior year and only one penny below the profitability in Q4 of last year, which obviously was not COVID-19 impacted you.
Sequential revenue growth was led by the continued bounce back up our strategy and business transformation group and the double digit year over year growth of our SAP.
Oracle ERP and one screen practices. The pandemic has accelerated the deployment of digital technologies to support cloud enablement transformation, which has resulted and the growth and these practices. We are further encouraged that Q4 sales and the U S. We're ahead of prior year's sales for the first time and 12 months on the.
National Front, Europe was sequentially stable, which for us that's very good news.
And the investments we have made to fully digitize all of our IP and the development of our IP as a service platforms, which include quantum leap our state of the art global benchmarking platform as well as our proprietary Hackett digital transformation platform for DTP are highly differentiating our offerings and we will continue to be important drivers of our growth for men.
The years to come and additionally, our partnerships with rapidly growing procurement infrastructure and cloud analytics and other cloud and other workflow automation providers will also continue to be key to our digital transformation strategy as well as impute and important future drivers of our growth.
On the balance sheet side, our ability to generate strong cash flow from operations has allowed us to continue our dividend.
And I back stock and fund acquisitions.
And we identify while continuing to invest and our business.
It is important to reiterate how important it was to start the year with such a strong cash position and no outstanding debt, which has provided us with the ability to properly manage to disrupt the demand disruption that we faced with that said, let me ask Rob to provide details on our operating results cash flow and also comment on outlook I will make additional com.
And then on strategy and market conditions following Rob's comments, Rob Thank you Ted.
As I typically do I'll cover the following topics. During this portion of the call I'll cover an overview of our 2024th quarter results along with an overview of related key operating statistics.
I'll cover an overview of our cash flow activities during the quarter and I will then conclude with a discussion on our financial outlook for the first quarter of fiscal 2021.
For purposes of this call I will comment separately regarding the financial results of our strategy and business transformation group for SPT.
Our EPS.
And analytics solutions group or EEA.
Our international group and the total company.
Our <unk> group includes the results of our North America, IP as a service offerings and our executive advisory programs and benchmarking services and our business transformation practices.
Our EEA solutions group includes the results of our North America, Oracle, and SAP solutions and Wall Street and practices.
Our International group includes the results of our SMB T and E resources that are based primarily in Europe.
And in addition, please note that all references to net revenues represent revenues, excluding reimbursable expenses.
<unk> expenses are primarily project travel related expenses and pass through to our clients that have no associated impact from a margin and profitability.
Given the limited amount of business travel due to the pandemic, we encourage investors to focus on net revenues to assess revenue and growth trends.
During our call today, we will reference certain non-GAAP financial measures, which we believe provides useful information to investors. We have included reconciliations from GAAP to non-GAAP financial measures and our press release filed earlier today.
Additionally, and my comments today are based on results from continuing operations.
As Ted mentioned, we continued to see an increase and cloud engagement throughout the quarter, which resulted in a sequential increase and net revenues of two 5% to $59 2 million and a 7% decrease when compared to the prior year, which was above the high end of our revenue guidance range.
For Q4, 2020, Reimbursable expense ratio and net revenues was 1% as compared to eight 4% and the prior year net revenues and Reimbursable expenses were both affected from the economic disruption of the COVID-19 pandemic as we transitioned to a remote service delivery model throughout the U S and Europe.
Net revenues of rest of beauty group for 23 4 million for <unk>.
<unk> increase of 5% and a decrease of 12% when compared to the same period and the prior year, reflecting the improving demand for enterprise transformation initiatives.
Net revenues for our EEA solutions group were $31 million and increase of 1% on both a sequential and a year over year basis. This was driven by growth from our SAP.
While stream and Oracle ERP practices offset by declines and our Oracle EPS practice.
And then reflecting the broad demand for cloud and enterprise applications.
Our U S operations, which currently represents 90% of our total company net revenues for the fourth quarter were up 3% and a sequential basis and down 5% when compared to the pre COVID-19 fourth quarter of the prior year.
More importantly, we now believe that we have an opportunity to be flat and the U S. When compared with a pre COVID-19 first quarter of 2020, which reflects the continuing improvement and client engagement and demand.
Net revenues for our International group were $5 8 million, a decrease of 1% sequentially and a decrease of 22, 3% on a year over year basis as expected.
Total company International net revenues accounted for 10% and total company net revenues as compared to 10% and the prior quarter and 12% from the fourth quarter of the prior year.
Our recurring revenues, which include our executive advisory IP as a service and Ams groups accounted for approximately 22% for a total company net revenues and approximately 32% of our total company pretax practice contribution and the quarter.
Total company pro forma cost of sales, excluding reimbursable expenses totaled $36 8 million or 62, 1% of net revenues for the fourth quarter of 2020 as compared to $37 8 million for 65, four percentage of net revenues and the prior quarter and $38 6 million.
Or 66% of net revenue in the previous year.
Total company consultant headcount was 928 at the end of the fourth quarter of 2020.
And as compared to total company head count.
903, and the previous quarter and 982 at the end of the fourth quarter of 2019.
The year over year decrease was primarily as a result of the actions taken.
And the second quarter of 2020 to reduce our global workforce by approximately 10% and response to the ongoing disruption from the pandemic.
Yes.
Total company pro forma gross margin and net revenues was 37, 9% up sequentially from 30 for 34, 6% and down as compared to the prior year of 39, 4%, primarily driven by the comparison to pre COVID-19 revenue levels.
S&P and <unk> gross margins on net revenues was 44, 8% up sequentially from 42, 4% and Dallas compared to the prior year of 48, 9%.
The year over year margin decrease was primarily driven again by the comparison to pre COVID-19 revenue levels.
EBITDA gross margin on net revenues was 31, 7% up sequentially from 27, 5% and Dallas compared to the prior year of 33, 2%.
We continue to see a group demand, resulting in improved utilization and when compared to pre COVID-19 levels.
International gross margins on net revenues was 42, 7% up sequentially from 47% and up as compared to prior year of 32%.
And increase is primarily driven by the staff reduction actions taken over the last year.
Pro forma SG&A was $12 5 million or 21, and 2% of net revenues and the fourth quarter as compared to $12 $7 million for 22% of net revenues and the prior quarter and $14 8 million or 23, 2% of net revenues from the previous year.
The year over year absolute dollar increase of $2 2 million was primarily due to decreased travel related to selling and marketing activities due to move to virtual sales and delivery models, resulting from the pandemic.
Pro forma EBITDA was $10 8 million or 18, 3% and net revenues for the fourth quarter as compared to $8 2 million or 14, 1% of net revenues and the prior quarter and $11 2 million or 17, 6% for net revenues and the previous year.
Total company pro forma net income for the fourth quarter of 2020 totaled $7 4 million for 23 per diluted share, which represents a sequential increase of <unk> 34 per cent and pro forma diluted earnings per share and was above the high end of our earnings guidance range.
This compares to pro forma net income of $7 7 million for 2000, <unk> <unk> per diluted share and the fourth quarter of 2019.
GAAP diluted earnings per share was <unk> <unk> for the fourth quarter of 2020 as compared to earnings per share of seven.
And the fourth quarter of the previous year.
GAAP results for the fourth quarter of 2020 included a $5 5 million for 12.
Restructuring and asset impairment charge, primarily resulting from a reduction and office space as we've transitioned to a remote operating model with.
And the transition resulted from the impairment of operating lease right of use assets property equipment, and leasehold improvements and other real estate related costs.
GAAP results for the fourth quarter of 2019 and could go for five Williams for 12.
Restructuring and asset impairment charge, primarily related to severance cost and a reduction of staff taken in Europe, and Australia and the prior year.
The company's cash balances were $49 5 million at the end of the fourth quarter of 2020.
As compared to $43 2 million at the end of the previous quarter.
Net cash provided by operating activities and the quarter was $12 9 million.
Which was primarily driven by net income adjusted for noncash items and decreases in accounts receivable.
Our DSO or days sales outstanding at the end of the quarter was 54 days as compared to 57 days at the end of the previous quarter.
Given our strong cash balances for the Companys $45 million credit facility remains unused during the fourth quarter.
During the quarter, we repurchased 40000 shares from the company's stock for an average cost of $11.
<unk> 96 per share or at a total cost of approximately 483000.
Including purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares.
Remaining stock repurchase authorization at the end of the fourth quarter was $4 3 million.
In November 2020, the board declared a quarterly dividend of NAV per share, which was paid in December 2020, making this the second dividend that was funded paid made and the fourth quarter.
And its most recent meeting the company's board of directors authorized a 5% increase and as annual dividend from 38.
To <unk> 40 per share to be paid quarterly and also declared the first quarterly dividend of <unk> 10 per share for shareholders of record on March 26, 2021 to be paid on April eight 2021.
I'll move now to our guidance for the first quarter of 2021.
Before I do so I would like to remind you remind everyone of the seasonality of our business relative to costs as we move sequentially from Q4 to Q1.
Specifically consistent with first quarter growth provided in previous years, our first quarter guidance of 2021 will reflect the sequential increase and U S payroll related taxes and the sequential buildup.
Vacation accruals.
As Ted mentioned in his comments, although economic uncertainty from the from the pandemic continues to be high the company's current estimates suggest that net revenues for the first quarter of 2021 will be and the range of $61 million to $63 million we.
We expect sequential revenues for SPT, and <unk> to be up and Europe to be down.
As our provision as I previously mentioned, we expect U S revenues to be flat and international revenues to be down when compared on a year over year basis.
We estimate pro forma diluted earnings per share and the first quarter of 2021 to be up sequentially and in the range of 24% to 2000 and success.
Which would be flat to up when compared to pre COVID-19 first quarter of 2020.
We expect pro forma gross margins on net revenues to be approximately 37% to 38%.
We expect pro forma SG&A and interest expense for the first quarter to be approximately $12 million.
We expect first quarter pro forma EBITDA and net revenues to be and the range of approximately 19% to 20%.
And we expect cash balances, excluding the impact of share buyback activity to be tempered due to the payment of 2020 performance related bonuses and the payment of employee income tax withholding triggered by net vesting of restricted shares.
At this point I would like to turn it back over to Ted to review, our market outlook and strategic priorities for the coming months.
Thank you Rob.
We look forward, let me share our thoughts on the short term and long term demand environment and on the growth opportunity. It offers our organization and it goes without saying that the pandemic created an unprecedented period, where demand disruption necessitated to ensure safety hedrick.
<unk> has required extreme measures, but it is now clear clearly evident that the digital transformation era has also been rapidly accelerated by the pandemic, which will further improve what we believe are the long term prospects for our business. This means that digital innovation and emerging enterprise cloud applications analytics and and.
For structure workflow automation and process mining and artificial intelligence.
And our dramatically influencing the way businesses compete and deliver their services and digital transformation is redefining all activities at an accelerated pace, forcing organizations to fundamentally change and adopt these new capabilities in order to remain competitive on.
From the demand side, the short term environment continues to improve as our clients now understand they must continue to transform and that the virus will continue to disrupt our lives until the vaccine and herd immunity is able to protect all of us.
This means all organizations must adapt to this next normal while we sort through the changes, which will result from the pandemic broadly speaking we believe.
The acceleration means demand improvement and on the expense side, the virtual delivery and sales model reduces our overall delivery costs, both of which should benefit future results specifically the increasing momentum we experienced in Q4 is continuing into the new year.
As our clients and our sales and service delivery model acclimate to this next normal market requirement.
This should position us well and 2021 and should allow us to return to pre pandemic levels of target growth and profitability.
Additionally, we continue to see an increase and interest from potential partners that desire to license, our IP and brand permission to our quantum leap and digital transformation platforms to bolster their business case development and value selling efforts, we have over 10 opportunities with more than half of them now.
And with formal proposals near term pilots launching or and contract discussions.
Strategically our focus will remain the same which is to continue to build our brand with our new offerings and capabilities focused on digital transformation around our fully digitized and unmatched IP.
Benchmarking and best practice intellectual capital platforms. This should allow us to serve our clients strategically increasingly remotely and whenever possible continuously.
Specifically, we continue to redefine our global benchmarking leadership through enhancements and quantum leap, our digital benchmark software as a service solution. This platform allows us to deliver more information with significantly less client effort and also allows our clients to leverage our IP and track transformation initiatives over the life of their respect.
And the effort. We believe there is no comparable platform and the market as I have previously mentioned, we have been experiencing increased interest from potential strategic partners and leveraging our platforms and IP.
We also continue to refine and improve our digital transformation platform to further differentiate our unique IP and related solutions design capabilities DTP allowed us to fully digitize, our IP and align proven software configuration and organizational solutions to help clients drive transformational change DTP as a core.
Assets of our Ipass digital transformation and cloud applications implementation offerings as I mentioned on our last call. We have added a 20 minute demo to our Investor Relations page on our website. So that investors can become more familiar with the capabilities of both of these market leading platforms lastly, even though we.
Believe we have the client base and the offerings to grow our business.
We continue to actively look for acquisitions and continue to actively pursue diesel for the strategic alliance that will leverage our IP.
Scope and scale and capability, which can then accelerate our growth in summary, we continue to believe we are well positioned to resume our growth as the demand disruption subsides and we're also encouraged to see the power of our brand and the focus of our offerings along with our solid financial position allow us to positively address the most challenging.
I'll make a events such as the ones, we faced almost day for the entire year.
This validates our focus and the investments we are making as always let me close by thanking our associates by asking them to remain safe for their tireless efforts and always urge them to stay highly focused on our clients and our people regardless of the short term challenges we encounter.
It's really easy to look at our overall results and see that were down obviously meaningfully on a year over year basis, and just ignore the fact that it has taken an extraordinary effort from the entire organization to really maintain and transition and the organizationally as flawlessly as I believe we have and allowed us to exit the year.
And with such.
Momentum and as well as such a terrific balance sheet and also look at the cash flow generation capabilities of the organization even through the most difficult types does conclude my comments, let me turn it over to our operator, and let's move into the Q&A section of our call operator.
Yes, so and lines are now open for questions. If you would like to ask a question over the phone. Please press star one and record your name if you'd like to withdraw your question Press Star two.
<unk>.
The first question and the Qs from George Sutton from Craig Hallum. Your line is now open.
Thank you and nice results Ted.
Ted you talked about on one side, the acceleration going into the year due to demand improvement on the other hand, you talked about your sales model being more efficient and this new environment can you put a little bit more meat on both of those components.
Well.
There is there is simply no doubt that the.
The pandemic has forced all organizations to really explore.
How well they are they are really leveraging all digital transformation technology and that just that that that in and by itself took what was already meaningful demand coming into 2020 and further accelerated so that means that.
The need for clients to consider changes and to engage organization like ours are only going to increase I also said George that we still have disruption and the system right because of the natural.
Concerns for the vaccine and and the safety concerns that we have for all of our associates and and all of our and it also inside of all of our community. So just consider the fact that in my mind, we're saying look this is all a created further acceleration and Thats why I think that's what's driving that if you want to call. It <unk>.
Economic activity, including stock stock market activity, even while the.
Environment is still being is still facing some of the headwinds because we're still shutdown I mean and office today, where we normally have $35 40 people and therefore five other peer in this building is relatively empty I don't believe that will be what will be what will happen and the balance of 2021.
And within that same construct the client engagement that discussions their desire to understand what theyre going to have to consider how theyre going to be able to transform to take advantage of emerging technology is just continuing to increase then on the flip side. You then take like we said the sales and delivery model moving to remote virtual.
Capabilities, you would think.
And we did I mean.
People always ask me, what's your what's the most significant is the price of 2020 and to me, it's how and how well everyone not our organization, but everyone has dealt with as a work from home and some other constraints that we are all faced both and our personal and professional lives well when you consider that.
Salting and the deployment of technology.
Has this.
Element of close interaction with the client and many cases some of the solution and happening face to face with clients and in some cases senior executives and for us.
<unk> see that that activity, even though and a disrupted state continues at such a significant level is is is pretty ensuring about what the opportunity that lies ahead with that said even with that demand improvement also comes the fact that you are.
Net clients, where normally spend somewhere between eight and 15% on on travel and and.
And other expenses when we were carrying out engagements that those expenses today are down too.
Fraction of 1%, which is almost an and.
Incredible two pit.
And <unk> to kind of wrap your head around and also see that we continue to serve and engage our clients and that means that everyone's become much more comfortably and engaging meeting considering executing work and doing it virtually and that brings.
That has two sides for this demand on the digital side is going to continue.
And it's going to continue and accelerated pace.
And then the delivery of the solutions. If it continues to be as virtual. It is today has significant operating benefits to our operating model as well. So I would also take I'll also make one other point George which is.
When you are a business like ours that leverages IP and insight so.
So strongly it's not always.
And how many people were deployed but how great. Our ideas are and what's happened to come from this very unique benchmarking capability. It just feels like were larger and our size doesn't seem is relevant and this kind of.
Virtual and shutdown environment, So I would add that it was almost as a third consideration of the things we're experiencing and how they will I think will favorably affect our business as we go forward.
So parents had a wonderful article on Oracle talking about how they're making the shift very effectively to the cloud year, obviously very well aligned with Oracle I Wonder if you could talk about.
The progress that Youre seeing in terms of that specific relationship and then any other thoughts on other partners folks like SAP and Coopers and one streams that Oracle article.
Has it has that kind of two elements to it.
And that's really how they are trying to.
And we're aggressively compete with the cloud infrastructure providers, which today are AWS, Microsoft Azure Google.
IBM with their hybrid offering and Oracle.
So talking about the fact that they believe that that that's a big marketplace and that they expect to participate and compete more aggressively in it and when.
And you then move that and Thats and Thats, how that how the apps are that supported and how they are efficiently deployed and maintained after theyre actually.
Figure for our client for us when you look at the fact that we're.
Today, our pipeline is.
95% cloud so the level of work that we're doing on on Prem related engagements is now.
Continuing to shrink that means that the transition for the company is significant the transition for us what it means to US is that we get a chance to leverage and take.
And this new cloud application offering that we take to market and help clients many of which have yet to migrate from their on premise environment and applications to a full cloud environment to us I think thats positive, obviously, youre seeing and in the and.
And the NASDAQ.
Activity, but as well as tech companies like Oracle that that are actively competing in these very hot spaces, So bodes well for Oracle it should bode well for us as well and George.
Perfect, Thanks, and congrats Rob forgetting the numbers all right.
Thanks, guys.
Thank you George.
And just a reminder, if you would like to ask a question over the phone. Please press star one and record your name.
Next question in queue is from Jeff Martin with Roth Capital Partners. Your line is now open.
Thanks, Good afternoon, Ted and Rob Hope you're well.
Thank you.
And <unk>.
And for Rob I guess or Ted you can comment on and as well, but relative to your guidance for Q4.
You'd be at the high end of that by a couple of million dollars.
Wondering if there were any specific drivers of that.
Things came in better than expected trends developing and more quickly than you thought.
Some insight there would be helpful.
While the Georgia.
Jeff the principal activity was the strength of some of our application groups. The SAP group the <unk> for high enough.
Cloud product for us, especially and the health care market that we focus in.
Has been very very strong so that group clearly outperformed.
But as I mentioned in my opening comments.
The Oracle ERP portion of.
And for our Oracle also outperformed our one screening group continued to distinguish ourself again with aggressive growth obviously on much smaller numbers, but also so it was it was that along with and transformation enabled activity, which was also in my comments. So it's it's.
Knowledge and pulling these transformation initiatives and so.
We're seeing it both on the east side of the business and.
And it also helped out the strategy and business transformation side and the business.
Okay.
Thanks for that and then one and to get some insight on the digital transformation acceleration essentially a lot of spend being pulled forward.
How does that flow through to Hackett is or is there a long lead time with that.
Do you expect that to.
Eventually yes.
And bringing the business in and of itself back to organic growth relative to kind of.
The levels, you were doing and and 2019.
Ericsson's, and obviously and <unk>.
Q2, and Q3 of last year and not not all that relevant.
The greatest acceleration, Jeff as you know happened.
From the work from home and virtual if you want to call. It increases that were immediately necessary to continue to conduct business.
You saw the infrastructure as a service companies like AWS and Microsoft.
Oracle and others are benefiting from that activity you saw that also and anything that dealt with the execution side, so the zooms and teams products.
Explode throughout the US and then and then you then saw that then follow into the application environment, but if you. If you said what was pulled forward and my mind what was pull forward was the infrastructure side.
The business that would.
It actually had to be put in place to facilitate the virtual operations.
All of these businesses, which was necessitated basically within weeks.
I don't believe that on the application side there wasn't much pull forward.
And I do believe though that it should follow and should follow the significant investments and infrastructure should be followed by the enterprise App space.
Continuing to be I'll call it.
It's not only strong, but and improving because I still think that the work from home and some other things and some of the distraction it creates dust.
Adjusted did prevent some of that natural activity to happen. So I do believe that the pull forward was infrastructure related I believe on the enterprise apps and on the organizational change related which is more core to our business.
There was a pull forward I would say that there was some disruption, but you should see that accelerated activity now follow and 21 as the pandemic subsides.
Okay, Great and then last question and I didn't catch it and if you gave it but.
Could you give and Oracle cloud growth number for the quarter and then could you also comment on average deal size and maybe deal average deal size within the pipeline.
We did not comment on the Oracle cloud growth, we did say that the Oracle ERP side was up strongly but our EPS side.
Syed.
And was down we now have a mix of ERP too.
<unk> on that Oracle side, probably to be 55 to 60.
Versus 40% to 45, ERP, so youre seeing what we're seeing at Oracle is that the Oracle.
Multi tenant deals is what's driving it the lead driver of oracles pull through is ERP, we still have a desire to expand that capability as you know into the east coast and we're looking and.
And considering.
Several options that we believe will be available to us and 2021.
Okay, and then what about comment on average deal size.
Oh I.
I don't do you have something problem.
And it depends on the particular price I'm going to I'm going to.
And I would say that.
And there wasn't any meaningful changed I mean, we have seen.
The deals we were seeing.
And we're clearly doing the larger multi tenant deal. So if we look at it and total by client, yes, we have some large client pulling through ERP EPS HCM deals those deals are clearly larger than we were experiencing a year ago. When we were.
And we were going to market more cash.
And of our ERP <unk> HCM kind of separate we're seeing that that multi tenant deal pull deals through and increase the deal size I don't have a list in front of me, but I can give you that anecdotally.
Great. Okay. Thanks for your time.
Yeah.
Next question is from Vincent Colicchio with Barrington Research. Your line is now open.
Yes.
Yes, Hello tenant Rob.
And I know your Oracle backlog was was rundown and pretty much.
And the process of rebuilding that Ted.
And a decent oracle quarter, where we stand now and at the end of the quarter.
Significant pipeline activity.
And as I, just told Jeff with.
ERP.
Turning to take the lion's share now and EPS.
Still underperforming so we have an ERP over performing EPS underperforming.
Does the Standalone <unk> deals that we would traditionally have.
Sure.
And I'll simply aren't there you're just seeing the combination of deals being together. So our success becomes increasingly dependent on broadening out our ERP capability.
And then.
The U S outlook is flat for Q1 curious if you could give us some differentiation between SPT and E.
Robert what we said that essence beauty.
They are both expected to be up and international arena and that allows that will allow.
That would allow us to be flat.
And therefore for flat and our service delivery model as more efficiently than that's what provides the opportunity for us to exceed last year's results in Q1, I'm sorry. So the ball is expected to be up both expected to be up with Europe down growth.
With international debt, which is primarily Europe.
And then Ted I'm curious.
And what gives you the confidence that you know.
The business improves as we move throughout the year is.
Is it.
Conversations with total conversations types of conversations and the pipeline that youre seeing are of opportunity in front of you.
Yes client activity, which is pipeline as well as <unk>.
The number of conversations and the way clients are engaging and a broader sense, even some of the.
Even some of the industries that have been hardest hit are re engaging that to me is a very positive sign.
So.
It's really just activity that we're experiencing.
Along with a more efficient delivery model both of those things.
Really allowed us allow allow us to take 2021 prospect.
Or that we could return to long term growth and profitability.
Our long term targets as I mentioned in my opening comments.
So the overall spend was broader this quarter.
And would you say that was and most SPT and EBITDA.
Yes, absolutely.
The when we said the total activity and the U S was up versus a year ago and Thats. The first time and 12 months that was across both groups yes.
Thank you and I'll go back and the Q.
At this time I show no further questions and I'll now turn the call back over to Mr. Fernando. Thank you operator, let me thank everyone for participating in our fourth quarter earnings call and look forward to updating you again, when we report the first quarter.
Yes.
This concludes today's call. Thank you for your participation you may disconnect at this time.